APR. 19, 2016
TERMS AND CONDITIONS AND
CONSUMER PROTECTION FINING
POWERS: CALL FOR EVIDENCE
Evidence submitted by AXA UK
AXA UK
1. AXA UK (AXA) is part of the AXA Group, a worldwide leader in financial services. AXA Group operates in 59
countries with over 161,000 employees and 103 million customers.
2. AXA has around 11 million customers in the UK and operates through specific operating companies – AXA
Insurance, AXA PPP healthcare and AXA Wealth.
Executive Summary
3. AXA welcomes the Government’s ambition to gain a better understanding of how Terms and Conditions
(T&Cs) can be made more accessible for consumers.
4. T&Cs represent a welcome and understandable component of consumer protection. However, within the
regulatory framework, AXA believes that more can be done to make T&Cs more user-friendly.
5. AXA firmly believes that T&Cs should allow customers to make informed decisions about the appropriate
level of insurance cover that they need. Clear T&Cs can give customers the peace of mind that they have
the right cover in place.
6. Fundamentally, AXA regards reducing the complexity of T&Cs as an important part of improving trust in the
insurance industry.
Consultation Questions
A1) Do you use formal terms and conditions?
Yes
7. The Financial Conduct Authority (FCA) regulates the insurance companies within the AXA UK Group and
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the FCA’s Insurance Conduct of Business Sourcebook (ICOBS) requires us to provide the T&Cs that form
the basis of the policy document. The T&Cs give details of a customer’s cover based on the product and
cover options they have selected. It includes all the exclusions and conditions that apply to that policy. We
state it should be read along with the schedule and certificate of insurance.
8. ICOBS, Consumer Credit legislation and various EU legislation also require us to provide other information
e.g. on cancellation rights. In our view the financial services market is already very highly regulated and any
changes to those regulations should come via our regulator, the FCA.
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https://www.handbook.fca.org.uk/handbook/ICOBS/
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A2) In your view would a general requirement for key T&C terms to be “succinct, bold and upfront”
encourage consumers to read them?
9. It should be noted that there is already an option in ICOBS 6.1.10 to provide a Policy Summary the details
of which are set out in ICOBS 6 Annex 2.
10. However, in 2015 and early 2016 AXA carried out a series of consumer research studies that offer clear and
relevant evidence to answer this question. Our research leads us to believe that clearer, simpler T&Cs
would encourage more consumers to read them. However this is still a hypothesis and can only be proven
once a newer form of T&Cs content is tested with consumers and readership rates monitored.
11. AXA has been running a centrally co-ordinated programme, working across all its businesses, to implement
initiatives that will improve the level of trust consumers have in our brand. We recognise that improving
consumer understanding through clearer communications is a core and fundamental element to improving
trust in our industry. The more we can break complexity for the consumer the more they will be able to make
the right decisions based on their needs and better avoid unwanted surprises or disappointments. Making
improvements to the way content in T&Cs are presented is a primary objective for this programme in 2016
based on finding from the following research:
AXA Personal Direct Insurance – Customer Experience analysis
12. In 2015, AXA conducted a major study to map the customer experience across its full journey cycle from
researching and investigating insurance options and deciding to buy, right through to the claims experience.
Key “pain” points were identified at each key stage in the journey and T&Cs were identified as causing
consumers some issues at the ‘shortlisting’ and ‘buying’ stages of the journey (first time purchase, renewing
or switching). The following “pain” points do imply that making key terms in the T&Cs more “succinct, bold
and upfront” could help mitigate these issues and give more confidence to the consumer at these critical
stages in the buying cycle:
Shortlisting T&Cs pain points:
Comparing like-for-like policies:


“Frustrated, it’s not easy to compare”
“Frustrated, insurers differ on terms and conditions”
Determining risks:



“Struggle to understand terminology”
“Bored reading terms and conditions”
“Scared to read terms and conditions”
Seeking reassurance:


“Anxious whether an expensive item is covered”
“Worry about being covered in all eventualities”
Buying T&Cs “pain” points:
Submitting payment details (on the phone)
 “Listening to long terms and conditions”
UK central marketing online community research
13. A series of statements on ideas to improve T&Cs were put forward to AXA’s online research community,
representing AXA’s customer base. These statements were tested for their appeal and whether the idea
would make the financial services provider more trustworthy. All of these ideas scored highly relative to
most other initiatives aimed at improving consumer trust:
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T&Cs Idea
Simplified terms and conditions and
policy literature – e.g.: using plain
English and/or providing a onepage document show all the T&Cs
and/or providing an app that clearly
explains T&Cs and what you are
covered for
When you have taken out a policy
you will be able to see clearly within
your product summary online
specific details as to what ‘you ARE
covered for’ and ‘what you are NOT
covered for’ so there are no nasty
surprises if you need to claim.
We will display the ‘most important
things to know’ from the terms and
conditions in an engaging short,
easy to read product summary
Providing you with more engaging,
searchable and structured T&Cs to
help you navigate and easily find
what you are most interested in
% Agree this is Very
Appealing
93%
% Strongly agree
provider trustworthy
88%
91%
83%
79%
75%
75%
64%
this
makes
the
14. The above findings do strongly indicate that re-structuring and re-purposing T&Cs would be welcomed by
consumers and therefore could lead to increased engagement with the content so customers can make fully
informed decisions
A3) Have you changed your terms and conditions since the Consumer Rights Act came into force on 1st
October 2015 (e.g. to ensure price and subject matter clauses are prominent and transparent)?
15. AXA already has a rigorous sign-off process for customer facing literature and has already embraced the
‘clear, fair and not misleading’ philosophy which the Act seeks to re-emphasise. AXA group companies are
also subject to FCA rules as outlined in our response to questions A1 and A2 and so are required to ensure
information on the price and subject matter of products or services are prominent and transparent. As a
result, therefore, AXA did not have to make specific changes to meet the requirements of the Consumer
Rights Act but is constantly reviewing terms and conditions to meet any legislative changes.
A4) When ensuring that your terms and conditions are compliant with the law are there any areas you
find particularly challenging?
16. AXA has developed the policy wordings over time with reviews from Legal, Underwriting and Compliance
expertise within the company.
Improving transparency, awareness and understanding
A5) How could you make Terms and Conditions documents easier to understand and more readily
accessible to customers? (e.g. auto-opening of T&Cs online; a simple index; key facts sheets; other –
please state)
17. AXA is exploring a number of different options for improving the lay out and accessibility of T&Cs. To
determine the best solution we will continue to test options with consumers and engage proactively with the.
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18. In reality, AXA is aware that the majority of consumers are used to ignoring T&Cs whatever product or
service that they are purchasing; some of the reasons are highlighted in the above answer to A2). The
challenge is to ensure that T&Cs can allow customers to quickly and easily understand the relevance and
importance of key information, thereby ensuring that they have the protection they need. Here are three
principles that will guide making T&Cs easier to understand and more accessible:
Simplicity: It is important to present policy information and T&Cs in the simplest way possible. The length
and PDF format of T&Cs often put people off reading them. This in turn leads to dissatisfaction if their claim
is not paid due to a misunderstanding of the product.
Transparency: This is vital in creating trust. Consumers need to feel that nothing has been hidden from
them in the small print. All of the key exclusions therefore should be communicated up front.
Engaging: Making the content engaging is essential to ensure that customers do read and review the T&Cs
of the product they have chosen. When they understand their policy they are empowered and confident
about the future.
Listed below are some examples of things that could be done to make documents easier to understand and
more readily accessible:
 Jargon busters: Rather than replacing important legal statements, provide a simple, plain
English description of what they mean. This allows the reader to quickly understand their
relevance and importance without having to interpret complex legal terminology.
 Re-structure: Documents containing T&Cs can be very long given all the different clauses,
exclusions and product details that have to be included. All of this information has its place, but
often the ‘need to know’ content is hidden within the body of the document. One approach is to
place all this ‘need to know’ content up front, so customers can see a summary without having to
search or trawl through the whole document. This information would need to include important
guidance on what a customer has to do to remain covered within their policy e.g. if a home
insurance policy had a clause that stated a customer is required to keep their heating on for a
minimum time over the winter months to avoid escape of water due to frozen pipes, this would be
made more prominent so a customer is less likely to miss this important information. This could
also take the form of layering i.e. need to know/nice to know/legal etc.
 Search function and Signposting: Making documents easier to search with simpler navigation
and signposting to key content is likely to be a key design feature.
 Pro-active communications: Some terms within the T&Cs have a situational or time element to
them and therefore it would help the customer if they were alerted to this information when it is
relevant. The heating example above is one piece of information that would help.
A6) Do you foresee any problems in making it clear that where tick boxes are used, ticking the box
should always mean “I want/agree to this service”?
Yes
19. The final tick box to check whether T&Cs have been read should mean “I want/agree to this service”, but
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with only 16% of individuals admitting to actually reading T&Cs according to Which? , it is clear that there is
a risk that many consumers will tick the box just to complete the sale as quickly as possible without taking
the time to check they fully understand what they have bought. The onus should be on the provider and the
customer. The provider has to do everything they can to highlight the important information the customer
needs to know, so they fully understand what they have bought and the details of their cover. The customer
has to make sure they access this information, hopefully clearly signposted, explained and highlighted,
before they make the final purchase. The provider has to make this content far more accessible, and
complicated terms easily understood, so there is no reason for the customer to find the task too onerous
and therefore be tempted to skip over this step and tick the box just to get onto the next stage.
—
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http://press.which.co.uk/whichpressreleases/chancellor-calls-on-which-to-end-companies-confusing-tscs/
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A7) If you maintain customer accounts relating to continuing services would you be able to provide a
clear track of changes in Terms and Conditions in the account history with the impact illustrated?
Yes
20. For example, AXA Wealth customers with an online account receive version controlled T&Cs with clear
signposting where changes have been made and these are stored in their ‘My Reports & Documents’ area,
for future reference.
A8) Could you fit key terms onto the equivalent of two smartphone screens if asked?
21. Whilst it is unlikely that insurance policies could fit all terms onto two smartphone screens, AXA believes
that key terms or “need to know” content could be showcased in this way. However, it is important to note
that the customer would still need to be clearly signposted to other important terms depending on the
product they have chosen and options they have selected.
A9) Have you had to rely on T&Cs in disputes with customers?
Yes
22. AXA does refer to T&Cs if we receive any complaints from customers. However we will constantly review
T&Cs and amend them if we consider that the term is not clear following a complaint or dispute.
A10) Have you ever adjusted your T&Cs following a (potential) customer request or complaint?
Yes
23. Please refer to A9.
A11) Have you considered or used ways for your sales staff to encourage greater customer engagement
with T&Cs (e.g. by completing a questionnaire in return for benefits or discounts)?
24. AXA understands that there can be confusion over what protection insurance policies provide, therefore it
has made it a key objective to help customers by making it clearer what they are and aren't covered for and
what information they need to provide when taking out a policy.
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25. To that end, AXA Insurance recently became the first insurer to publish the overall percentage of claims
made which are paid, and is pleased to now display that information at the product level for Motor, Home
and Travel. AXA believes that increased transparency is crucial to lifting consumer trust.
26. In addition to information on the relevant web pages for home, travel and motor insurance, AXA has
introduced short on-line films to help consumers understand some aspects of health insurance, and
highlighting the medical conditions customers should declare when taking out a travel insurance policy. The
company has also developed a series of documents that explain the common reasons claims are turned
down and the most important exclusions that customers should be aware of when taking out a policy.
A12) Do your terms and conditions restrict use of competitors’ software or media on your product?
Not applicable
Personal data
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http://www.axa.co.uk/newsroom/media-releases/2015/AXA-to-publish-claims-statistics-in-customer-transparency-drive/
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A13) How do you explain to customers how their personal data will be used by your and other
businesses and confirm their consent for doing so?
27. AXA communicates to our customers about how we use their personal data in two main ways: in privacy
documentation (readily available in electronic and paper form) and through recorded telephone
conversations when customers contact us and, in some instances, where face to face activities take place
via agents. Our systems maintain records of customers who have consented to us using their data.
However, practices are not standardised across the company and vary within each business unit.
28. AXA is currently analysing the recently published EU General Data Protection Regulation (GDPR) to
understand further the impact. Preliminary analysis confirms that all customer interaction will be further
reviewed to ensure compliance with the future privacy requirements. We therefore recommend that BIS
considers the impact of the GDPR when considering any proposals to introduce legislation to make T&Cs
user friendly following this call for input.
A14) Where do you think consent on the use of personal data (e.g. sharing of data with third parties)
would best be covered?
29. The law requires us to request consent for the use of customers’ data at the point of capture. Ideally, we
should request consent at different stages of the customer journey where additional processing is required,
for example when we request consent to contact customers with marketing emails. However, this may
negatively impact the customer experience and so may not be efficient in practice.
A15) If requested could you tell customers all the other organisations that have access to the data you
hold on them?
Yes
30. We could provide details of any third party organisation with whom we share customer data when it relates
directly to an individual claim. However, setting out details of third parties suppliers within the privacy notice
would pose problems as support services, e.g. garages for motor repairs and loss adjusters do vary.
Consequently, each time the insurance company appointed or terminated a third party arrangement, privacy
notices/policies would need to be updated. This would be onerous and invalidate the documents provided
to the policy holder.
Enforcement and fines
A16) Is there a need to give enforcers more effective tools to enforce consumer protection law?
31. The FCA already has the necessary powers to take enforcement action and impose fines against firms
regulated by the FCA so we do not consider the FCA needs any further enforcement tools.
A17) What would be the main benefits, costs and drawbacks from having an option to impose civil
monetary penalties for non-compliance by business?
32. The Financial Ombudsman Service (“FOS”) already has the power to adjudicate consumer and small
business complaints up to a certain monetary limit. The FCA can also impose fines (see A16 above). In
certain circumstances breaches of FCA rules gives customers rights to damages. Customers also have
recourse to courts for breaches of relevant regulation and law.
A18) If civil monetary penalties were to be introduced should this be done via:
See A16 and A17 above.
33. Any administrative decisions by enforcers should be subject to strict checks and balances and there must
be an appeals mechanism. The enforcers should be required to set out the enforcement process and how
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this is monitored. Other enforcement bodies could utilise the work the FCA has undertaken in setting out its
enforcement process including the calculation of fines.
A19) Should any new fining powers apply to all consumer protection rules including unfair terms?
No
34. They already exists for financial services companies as stated above and therefore new fining powers are
not needed.
A20) Which enforcement bodies should be included if administrative or civil court powers to impose
monetary penalties were they to be granted?
35. N/A as the FCA and Financial Ombudsman Service already has these powers.
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